Special bond is a security conditioned to answer the judgment of the court.[i] According to Fed. R. Civ. P. Supp. Admiralty Rule E (5)(a)[ii], in an admiralty suit, when an order for maritime attachment and garnishment or process in rem is issued, the implementation of such process can be stayed and the property can be released. This stay or release can be obtained by giving adequate security which is approved by:
- The court or clerk; or
- Stipulation of the parties who is answerable to the court or any appellate court in action.
The parties can specify the amount and nature of the security that has to be deposited for releasing the property. If the parties refuse to specify the security amount, then the court will fix the principal sum of the bond. The amount fixed by the court must be sufficient enough to cover the amount of the plaintiff’s claim including accrued interest and costs. The principal sum must not exceed:
- Twice the amount of the plaintiff’s claim; or
- The value of the property on due appraisement, whichever is smaller.
The bond or stipulation will carry the condition for the payment of the principal sum and an interest at six per cent per annum.[iii]
A special bond acts as security only to the particular claim of the plaintiff for which the bond is given. The bond will never secure the claims or satisfy the judgments obtained by other persons who intervene in the suit after the bond has been given by the plaintiff and the vessel is released.[iv]
[i] Gerard Constr., Inc. v. Motor Vessel Virginia, 480 F. Supp. 488, 490 (W.D. Pa. 1979)
[ii] USCS Admiralty and Maritime Claims R E
[iv] The Willamette, 70 F. 874, 880 (9th Cir. Wash. 1895)